Net1 International: Operational update

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Net1 International

Oslo, December 3, 2021. Reference is made to the press release published on July 2, 2021.

OPERATIONAL UPDATE

During the year 2021, the operations of Net1 International in Indonesia (“Net1 Indonesia”) experienced serious external problems which had an impact on the implementation of its business plan agreed with the lenders of the facility. Senior Secured Loan Fund of $ 75.5 million (the “Lenders”) in November 2020. In addition to the problems faced due to the COVID pandemic, Indonesia suffered three natural disasters in January 2021 by an earthquake earth, flood and volcanic eruption, then the technical difficulties causing a temporary grid suspension occurred in June 2021. As of August 2021, 60% of the grid service has been reactivated and although revenues and overall operations have suffered, Net1 Indonesia has been very successful in maintaining the number of subscribers.

The management team of Net1 Indonesia worked closely with government officials to resolve technical issues and resume full network service as soon as possible, while exploring the possibilities of a Mobile Virtual Network Operator (“MVNO”) / wholesale now available thanks to the OMNIBUS law. and new opportunities given the government’s increased interest in deploying internet access and online awareness in rural areas.

At the same time, Net1 Indonesia has been in dispute with the government since 2019 regarding annual frequency fees (“BHP fees”). Although it was successful in challenging and winning administrative court cases in this regard, Net1 Indonesia decided to change its approach where all lawsuits relating to historical frequency fees were formally withdrawn and after consulting with the Ministry of Communication, the company formally requested relief from the frequency fees through existing legislation.

On August 27, 2021, however, Net1 Indonesia received a letter from the Indonesian Ministry of Communication demanding the full payment of the 2019 and 2020 frequency royalties, a total of IDR 477 billion by November 27, 2021, failing which the license would be revoked. However, this did not take into account the separate process of frequency fee relief pursued by the company.

In view of the ongoing and productive discussions on the spectrum relief process with the Ministry of Communications, the Ministry of Finance and the Auditor, Net 1 Indonesia had hoped that these discussions would lead to a positive conclusion. However, on November 25, 2021, a letter was received from the Ministry of Communication which reiterated the request for payment. Net1 Indonesia then contacted the Ministry of Communication who then sent a letter to Net1 Indonesia agreeing to receive a prepayment of IDR 100 billion and provide a one month extension to accommodate the ongoing relief process. However, on November 30, 2021, a new letter was received canceling the prepayment and extension agreement claiming that the frequency license is revoked on November 30, 2021 due to unpaid frequency royalties.

As a result, Net1 Indonesia has suspended all network services from midnight November 30, 2021 and is contacting government officials again about this. Further development of the above will be announced as it becomes available.

If the situation is not resolved as soon as possible, this will have serious consequences for the operations of Net1 Indonesia and for the group as a whole and it may not be possible to continue the operations of the group.

REPORTS

The above issues have resulted in delays in financial reporting for Net1 International due to difficulties in valuation assessments and going concern. Net1 International intends to finalize its 2020 accounts and convene the General Meeting as soon as possible.

LONG-TERM FINANCING

While shareholders and lenders have reached agreement in principle on the short-term financing package, with the aim of further supporting the new business, uncertainty remains as to the availability of the structure and short-term financing needs. term and long term, especially with regard to recent developments.

ENDS


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